Bank of Ireland to slash U.K. mortgage book

Lender to stop dealing with intermediaries; cost savings targeted

By

SimonKennedy

LONDON (MarketWatch) -- Bank of Ireland will cut its U.K. mortgage book, amounting to 29 billion pounds ($43.7 billion), "significantly" as part of a change in the focus of its business operations, the lender said Thursday.

It will no longer accept new U.K. mortgage business from intermediaries -- a common source of new business. Instead, future mortgage distribution will be handled via a joint venture with the Post Office as well as direct sales from its 44 branches in Northern Ireland, Bank of Ireland (BKIR)
IRE, +0.93%
said.

"As a result of this de-leveraging strategy, our U.K. residential mortgage book... is expected to reduce significantly over an extended period of time," a brief company statement said.

The move is part of the bank's broader strategy to lower costs and reduce its dependency on wholesale funding, which has become more expensive and harder to obtain since the credit crunch began.

Shares of Bank of Ireland fell 2.2% in Dublin.

The bank's stock has fallen around 91% since the start of 2008, undermined after the government was forced to step in and guarantee deposits across the sector.

Bank of Ireland didn't specify what staffing cuts it might make but noted it hopes to achieve savings of 30 million pounds a year "subject to consultation with staff." It will also take a one-off restructuring charge of 40 million pounds.

Asset quality across Bank of Ireland's U.K. mortgage portfolio remains robust relative to the wider market, the company said, and is in line with guidance it provided in November.

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